Rational Decision Making: Benefits, Limitations, and Ethical Dimensions

This article discusses the concept of rational decision making, its benefits and limitations, and the ethical dimensions of managing a business. It explores the procedure to solve problems with correct decision-making and the issues faced by organizations. The case study of Cambrew Brewery is used to illustrate these concepts.

Rational Decision making

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
RATIONALE...................................................................................................................................1
LITERATURE REVIEW................................................................................................................1
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Rational decision making is the process that helps the business to have different
alternatives in hand in order to solve a single business problem(Vickers, 2017). Present study is
based on the firm Cambrew Brewery which is the largest brewery in Cambodia and was founded
in the year 1965. Report will include different concepts with respect to rational decision making
and also its different benefits and limitations. Report will further include different issues that
business faces in rational decision making and is required to follow the respective rational
decision making procedure to solve the problem in an effective manner. Report also concluded
that there are different ethical dimensions in order to mange the business and business is required
to overcome the different ethically issues.
RATIONALE
The aim of this project is to understand the ethical dimensions of managing a business. It
also aims to understand the nature of rational decision-making and the necessary steps that
organisations are required to take in order to solve the problems with correct decision making
process. Another aim is to identify the issues that business face during the rational decision
making and the way organisations can overcome these issues in order to reach their goals with an
effective decision-making.
LITERATURE REVIEW
Concepts of rational decision-making:-
According to Halpern and Stern (2018) Rational decision making is the process where
different alternatives are there and business is required to select and implement the best one.
There are different logics and analysis are used over different insights in order to make a rational
decision. It is very important for the business to formulate different business goals and
accordingly identify the alternatives and analyse the one that can bring better results for the
business in order to achieve the desired business goals. This decision-making involves step by
step process in order to have an effective decision in hand and that also results in fact full
decision by the business. In order to have rational decision for the business. It is very important
for the organisations to identify the problems or different opportunities on bases of which they
have an effective decision making. It generally promotes high quality of decision and helps the
business to reduce the risk and uncertainties that they have with respect to its decisions. In order
to make rational decision, organisations are required to follow an orderly path that is from
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identification of problem to the specific solutions in hand. Having a rational decision for the
business, results in maximum utility and its also promotes a broad and deep analysis of the
different situations.
For example:- Cambrew Brewery is among the largest brewers in Cambodia and many times
business is required to set different policies for the business in order to promote quality of
decisions and to reduce the risk and uncertainty that business may face in long run. There are
different business policies that are set by the organisation with the help of deep analysis of
different situations and working rationally to have fact full decision in order to set different rules
and regulations of the organisation.
Calabretta, Gemser and Wijnberg (2017) argues that the business always make choices
that maximize their benefits and also minimize the respective cost. It requires lot of
consideration of the respective data and all this process takes time. Rational decision-making do
not work effectively if the decisions are required to be made on quick bases. There are many
situations where the rational decision making results in dilution of the perceived benefit of
different alternatives. Rational decision-making is usually beneficial for making effective long
term policies as it requires lot of time and analysis. It does not work effectively for short term
business goals and decisions.
For example:- Many time Cambrew Brewery is required to make quick decisions for its
business with respect to the operations and it having rational decision-making do not help the
organisation to make quick decision for having an effective business operations.
Benefits and limitations of rational decision-making:-
As per the view point of Cascetta and et.al., (2015) Rational decision making usually
benefits the organisation to have effective decision in hand as it helps the business to avoid
chances of any error, assumptions or any sort of distortion. This results in high quality of
decision for the business and it easily breaks any complex issues into simple steps that
organisation can follow to reach out their final solutions. It helps the business to have optimal
outcome with maximum utility and works effectively to have deductive completeness. There are
different structured questions that helps the business to have deep analysis and the risks that are
associated with the decision-making can be addressed with different appropriate approaches.
For example:- Cambrew Brewery works effectively to make quality of decision for its business
and for the same rational decision making helps the organisation. Company generally break
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down the tasks into parts and addresses the individual part with different alternative solutions.
This helps Cambrew Brewery to solve the business problems and address the respective needs
for achieving the business goals. There are different decision-making tools that are available for
making rational decision and company access different information with the help of these tools
in order to make better organisational decisions.
Power (2016) argued that there are different limitations in applying the rational decision
for business profitability as many a time, the working employees are not able to gather, process
and understand the information that is required to make an effective decision. There are many
problems that are so complex that the business is not able to take rational decision and the
optimization also become limited for the company. As the business is required to have an
effective information in order to make rational decisions, not having right information in hand
may not help the business to have quality of decision. Lack of information also leads to lack of
accuracy and integrity of the business.
For example:- In order to make rational decision, Cambrew Brewery is required to collect right
information so that they can make rational decision for its business. It is very important for the
business to have understanding of the different government norms, policies etc. in order to have
effective decision in hand. In order to have rational decisions in hand, business is required to
have proper time as it is not possible for Cambrew Brewery to make rational decisions within a
limited time interval.
Issues faced by organisation with respect to rational decision-making:-
Bennett (2017) there are different issues that organisation faces before and after
implementation of rational decisions for the business. It is been analysed that rational decision
usually leads to unrealistic assumptions and that may lead to problem in achieving business
goals. Many times the leaders involve in the rational decision making process are unable to
collect the right information or may be possible the information is in hand but they are not able
to access the same. It takes time to collect the data and acquire the same with the help of right
resources. But when the business is required to make quick decisions, it is not at all possible to
make rational decision on the spot. Rational decisions also have focus on the assumptions and
not on the respective outcomes that these decisions will be leading on. There are certain norms
and policies that business is unable to change and here the rational decisions do not work in any
manner. Inadequate support of the senior authorities and lack of reliable data, do not support the
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business to make rational decisions. Sometimes having too many options in hand for solving a
single problem, do not clear the decision making and it may become complex for the business to
reach out the business goals.
For example:- During the decision making process, Cambrew Brewery works effectively to
collect right information and analyse the same in order to make better decisions for the business.
But during the process, there may be chances that the business is required to complete the
decision-making process within a time limit. In order to solve the business related problems,
gathering the actual facts that are impacting the organisation is quite tough and also takes time. It
is therefore important for the business to identify the decision that will be best suiting for the
situation and weigh all the evidence. In order to make an effective decision business is required
to investigate the situation in detail and accordingly work to make rational decision for the
business. In order to reach the business goals with effective decision making, Cambrew Brewery
is required to select the best possible solutions and communicate the decision to all the respective
working staff, so that they can also take the decisions in their actions.
Procedure to solve the problems with correct decision-making:-
Moser (2016) stated that in order to have correct and rational decision-making, business
is required to follow an effective procedure where the problems that business is being facing is
generally identified and to solve these problems, business is required to search for different
alternatives. Further business is required to weigh the alternatives and choose the one that suits
the best for the given situation. It is very important for Cambrew Brewery to implement the
choice in right directions and evaluate the results. If the results are effective and goals are been
achieved than business is required to monitor and evaluate the same. If not, then business is
required to start the process again for have rational decisions in hand. While identifying the
different problems, business is required to have its focus on the causes and not on symptoms so
that results can be more effective for the business. The more complex is the problem, business is
required to be more methodical with the approach of problem solving. Further, during the search
for different alternatives, business is required to address the respective problem in an effective
manner by identifying the possible alternatives and business can use different tools like
brainstorming with the respective group in order to identify the potential alternatives. It is better
for the business to think of as many possibilities as possible in order to have better results inn
hand. Further, Cambrew Brewery is required to weigh all the respective alternatives and analyse
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the one that best fits the solutions. There are different factors according to which business is
required to weigh the alternatives like its impact on the organisation, its effect on the public
relations, legality, ethical actions etc. After its analysis, business is required to choose the best
alternative and eliminate the other options. As the alternative is been selected, it is
responsibilities of the organisation to implement the decision and make all its employees aware
about the decision. Cambrew Brewery is also required to give an effective training to all its
employees and have a closure look on the necessary changes that business is implementing.
Finally, Cambrew Brewery have to evaluate the results and have to work effectively to handle
these problems in an effective manner.
Ethical dimensions to manage a business:-
As per the views of Wallace and Sheldon (2015) it is very important for the business to
understand the ethical dimensions and develop code of conduct and ethics that all the working
employees as well as leaders are required to follow in order to build integrity and trust in the
organisation. There are different ethical dimensions that business is required to follow in order to
manage the organisation ethically. The most important dimension is with respect to the integrity
and trust of the working employees. It is responsibility of the business to conduct the business
affairs honestly and to treat all the customers fairly as they are having trust on the business.
Cambrew Brewery is required to develop high level of trust with all its customers and it is the
only key factors that helps the business to get success. Another ethical dimension is related to the
diversity and respectful workplace. Cambrew Brewery is having a diverse work culture where
the people are from different culture, race, nationality etc. It is quite difficult for the business to
make all these employees work in an effective manner. However, the business is working
effectively by training the employees and creating respectful workplace environment that can
value the contribution of all the respective employees. Another dimension is related to decision
making in order to reach the business goals. In order to explore ethical dilemmas, business is
required to identify different courses of actions that includes collection of different facts and also
evaluating different alternatives in order to make an effective decision making. By implementing
ethical decisions for the business, organisation is required to protect the employees and also its
customers rights. Not having fair business operations, may results to different business problems
for the organisational image in eyes of its customers.
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Rousseau and Olivas‐Luján (2015) argues that, if the business is able to manage its
business ethically it leads to an effective image of the organisation in eyes of its working staff
and also to its customers. Cambrew Brewery is required to train its diverse working culture, as
it helps the business to gain the trust of its employees and make them work effectively for the
business. There are different laws for equal pay, gender equality, minimum wages etc. that
business is required to work on in order to have ethical work practices. Not following these can
results in penalty or any other strict actions from the government.
Issues faced to manage the business ethically:-
According to Crane and et.al., (2019) there are different issues that business faces in
order to manage the business ethically. These issues are related to the discrimination of the
employees, Fraud by different working staff and also health and safety of its employees and
customers. Cambrew Brewery is required to work effectively in order to make the employees
feel that they are equally treated as it affects the health of the employees and creates stress for
them. It can also lead to anxiety disorder and also depression that results in reduce of self esteem
of the working staff. Business is also required to work effectively to avoid the frauds in order to
make the work practices ethical for both employees and customers. It impacts the daily activities
of the business and leads to loss in its profitability. It generally leads to trust issue of customers
with that of the organisation and it impacts the public image of the company. Cambrew Brewery
is required to have proper measures and security so that the working staff is not involved in any
such activity and they work ethically for the business. Another issue is related to the health and
safety of the employees. Business is required to make its policies that follows health and safety
of the working employees and company is required to provide all the possible safety options to
its employees while they work. Not only this, business also face issues with respect to the safety
and health of its customers. Cambrew Brewery is in need to test its products before they reach to
the customers in order to make sure that it do harm its customers.
Actions taken by company to overcome issues with respect to business ethics:-
Rhodes (2016) stated that business is required to take effective decisions with respect to
the business ethics as it helps the organisation to have an effective image in eyes of the working
employees and also its staff. In order to overcome the workplace discrimination, business is
required to treat its employees equally on bases of the pay that they get and also on bases of the
way they are been treated by seniors. It is important for Cambrew Brewery to have work based
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diversity where different employees irrespective to their race, gender, nationality etc. work
together for business profitability. Business is also required to overcome the business frauds by
making the employees train and motivated so that they can work effectively. Providing support
routes to the employees and giving them priority also helps the business to make them work
ethically. There are different health and safety policies that business is required to follow and
have to make the employees aware and trained so that they can work effectively without getting
hurt. It is also important to train the staff about the healthy products so that the offerings received
by customers are healthy for them and they can develop trust of the customers towards them.
Referring overall evaluation, it can be presented that rationale decision making is
objective in nature. Moreover, with regards to decision making objective evaluation of available
options and their consequences are done. In other words, emphasis is placed on analysing the
extent to which one option will positively contribute in the growth and success of firm. Along
with this, decision making aspects is also considered as technical because evaluation of data set
is done by taking into account linear programming technique, decision tree etc. Thus, it can be
presented that we are agreed with the statement that rationale decision making is both objective
and technical in nature.
CONCLUSION
From the above study it is been concluded that it is very important for the business to
have rational decision making as it helps in achieving the organisational gaols. Report concluded
that there are different benefits as well as limitations to have rational decision making an
business is required to work on these limitations in order to have better decisions for the firm.
Report further concluded that there are different issues that business faces with respect to the
rational decision making due to its different limitations. Report further concluded that business is
required to follow the procedure of problem solving as it results in better decision making for the
organisation. Report also concluded that there are different ethical dimensions that helps in
managing a business and business is required to take effective actions in order to overcome
ethical business issues.
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REFERENCES
Books and Journals
Bennett, T., 2017. A decision-making approach to opioid addiction. In The reasoning criminal
(pp. 83-102). Routledge.
Calabretta, G., Gemser, G. and Wijnberg, N.M., 2017. The interplay between intuition and
rationality in strategic decision making: A paradox perspective. Organization Studies.
38(3-4). pp.365-401.
Cascetta, E. and et.al., 2015. A new look at planning and designing transportation systems: A
decision-making model based on cognitive rationality, stakeholder engagement and
quantitative methods. Transport policy. 38. pp.27-39.
Crane, A. and et.al., 2019. Business ethics: Managing corporate citizenship and sustainability in
the age of globalization. Oxford University Press.
Halpern, J.J. and Stern, R.C. eds., 2018. Debating rationality: Nonrational aspects of
organizational decision making. Cornell University Press.
Moser, P. ed., 2016. Decision rules in the European Union: A rational choice perspective.
Springer.
Power, D.J., 2016. Data science: supporting decision-making. Journal of Decision systems.
25(4). pp.345-356.
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies. 37(10). pp.1501-1518.
Rousseau, D.M. and Olivas‐Luján, M.R., 2015. Evidence‐Based Management. Wiley
Encyclopedia of Management, pp.1-3.
Vickers, A.J., 2017. Decisional conflict, regret, and the burden of rational decision making.
Wallace, M. and Sheldon, N., 2015. Business research ethics: Participant observer perspectives.
Journal of Business Ethics. 128(2). pp.267-277.
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